Biotech Start-up Boasts Of Diverse Business
By LINGLING WEI
Of DOW JONES NEWSWIRES
NEW YORK -- BioTransplant Inc. (BTRN) is part of the speculative world of small biotechnology startups.
The Charlestown, Mass., company has been in existence for 10 years and until recently has never sold a product.
Chief Executive Elliot Lebowitz, however, said his company is involved in a number of projects with great potential. Although BioTransplant may be a long-term bet, Lebowitz said his company offers a chance to invest in a diverse line of businesses.
BioTransplant just started to sell a medical device in Europe. The company hopes to sell the device in the U.S. in the future. It is also working with established drug companies on two projects: developing a psoriasis drug and
developing products involved in transplanting animal organs into humans. BioTransplant also has a stake in an Australian stem cell company.
The medical device represents BioTransplant's first revenue opportunity. The device, called the BCell Separation System, removes tumor and other unwanted cells from bone marrow. BioTransplant launched the device in Europe earlier this year but didn't have enough cash to market it, Lebowitz told Dow Jones Newswires in an interview.
In June, however, BioTransplant raised $19 million by selling 3 million shares in a private placement, and the money allowed BioTransplant to begin to market the medical device in Europe. The company expects it will get a larger
health-care company to help it with distribution. Lebowitz said it's too early to say how much revenue sales in Europe the device will generate.
The BCell Separation System was developed by privately held Eligix Inc., a small Massachusetts medical device company BioTransplant acquired.
It will be a few years before BioTransplant will be able to market the device in the U.S., Lebowitz said, because of the difficulty of getting regulatory approval.
The cash problem that delayed marketing the BCell Separation System in Europe has concerned investors. BioTransplant's stock, which traded as high as $18.50 in October, now trades around $6.50. It traded as low as $2.97 in March. The stock trades on Nasdaq.
Still, some believe BioTransplant has potential. In a Barron's article in July, an investment strategist from Morgan Stanley Dean Witter touted the company's psoriasis drug candidate and its joint efforts with Novartis AG (NVS) to develop products used to transplant animal organs.
Lebowitz said the psoriasis treatment, MEDI-507, will be in Phase III clinical trials early next year. Phase III trials often indicate that a product is close to being approved by the Food and Drug Administration. Research on the drug
is being funded by MedImmune Inc. (MEDI), a drug company based in Gaithersburg, Md. BioTransplant expects MEDI-507 will come to market in the U.S. in 2004. MedImmune will market the drug and pay royalties to BioTransplant.
The company will receive "net low-double digit royalties" on its sales, Lebowitz said. The royalty figure is impressive given the typical 20% to 23% profit margin for drugs.
BioTransplant also sees a big revenue opportunity in developing products used to help transplant animal organs into humans. Novartis has committed $30 million for the next three years for related preclinical studies.
BioTransplant holds a 25% stake in Stem Cell Sciences Ltd., an Australian private biotech company that uses stem cells to develop regenerative medicine. The company gets the stem cells from adults, not embryos, a subject of controversy. Lebowitz said products from this endeavor are a long
way off and noted that his company's involvement is another way that BioTransplant has diversified. |
